p,A)

---

SECOND DIVISION
ROGER CABUHAT AND CONCHITA
CABUHAT,
Petitioners,

G.R. No. 203924

Present:
CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,*
MENDOZA, and
LEONEN, JJ.

- versus -

DEVELOPMENT BANK OF THE

PHILIPPINES, represented by Manager
Perla L. Favila,
Respondent.

Promulgated:

29

x---------------------------------------------------------------------------------

DECISION
BRION, J.:

This is a petition for review on certiorari assailing the Regional Trial

Court's (RTC) June 27, 2012 and October 23, 2012 orders dismissing Roger
and Conchita Cabuhat's Petition to Set Aside the Foreclosure Sale in Civil
Case No. 1741.1
Antecedents
The subject of this case is a 292 square-meter property (subject lot) in
Barangay Poblacion, Municipality of Narra, Palawan, formerly covered by
Original Certificate of Title (OCT) No. C-2372 registered in the name of
petitioner Roger Cabuhat.
On August 30, 1993, Roger - together with his parents Rodolfo and
Conchita Cabuhat - mortgaged the subject lot to respondent Development
On Leave.
Both penned by Acting Presiding Judge Bienvenido C. Blancaflor, RTC of Palawan and Puerto
Princesa City, Branch 48.

Decision

G.R. No. 203924

Bank of the Philippines (DBP) to secure a two (2) million peso loan. The
mortgage was annotated on August 31, 1993 as Entry No. 6501.2
DBP allegedly released/cancelled this mortgage on October 26, 1998.3
Four days later on October 30, 1998, Conchita and Roger mortgaged
the subject lot to DBP again to secure their outstanding six (6) million peso
loan. The mortgage was annotated on November 27, 1998 as Entry No.
11815.4
The Cabuhats failed to pay their loan, prompting DBP to extrajudicially foreclose the property. DBP won the public auction at a bid of
P2,001,900. DBP received a Certificate of Sale dated June 28, 1999.5
On July 6, 1999, the Certificate of Sale was annotated on OCT No. C6

2372.

The Cabuhats failed to redeem the subject lot. Consequently, DBP

consolidated the title in its name. Thus, on December 10, 2003, TCT No. T17115 was issued cancelling OCT No. C-2372.
On July 25, 2005, DBP filed an ex parte petition for the issuance of a
writ of possession before the RTC.7 The petition was raffled to RTC, Puerto
Princesa City, Branch 48 and docketed as Civil Case No. 1741.
The RTC notified the Cabuhats who filed an opposition. The RTC
nevertheless issued the writ of possession on May 15, 2007,8 because it was
its ministerial duty to issue the writ upon the purchasers consolidation of
title following the non-redemption of the property.9
The Cabuhats appealed the RTCs May 15, 2007 Order in CA-G.R.
CV. No. 92449, 10 arguing that their opposition was meritorious. However,
the Court of Appeals (CA) denied the appeal on January 21, 2010,
emphasizing the summary and non-litigious character of the ex parte
proceedings for a writ of possession.
The Cabuhats appealed the denial to this Court in G.R. No. 193367.
On November 15, 2010, we denied the petition for failure to sufficiently
show any reversible errors in the CAs decision.11
On October 27, 2011, the Cabuhats filed an Urgent Motion/Petition to
Set Aside the Foreclosure Sale and to Cancel the Writ of Possession. 12
2
3
4
5
6
7
8
9
10
11
12

Rollo, pp. 10, 187.

Id. at 10.
Id. at 10, 188.
Id.
Id.
Id. at 11, 114, 134,188.
Id. at 44.
Id. at 48.
Id. at 132.
Id. at 151.
Id. at 49.

Decision

G.R. No. 203924

Citing the June 29, 1999 Certificate of Sale, they claimed that the
foreclosure was executed pursuant to the cancelled August 31, 1993
mortgage instead of the existing October 30, 1998 mortgage. 13 Hence,
the foreclosure and the writ of possession were void because they stemmed
from an inexistent contract.14
They further invoked the RTCs equity jurisdiction to suspend the
implementation of the writ of possession.15
On October 28, 2011, the RTC refused to suspend the implementation
of the writ due to its ministerial character. However, it required DBP to
comment on the motion/petition.16
On November 22, 2011, the writ of possession was finally
implemented.
In its December 9, 2011 Comment,17 DBP pointed out that it already
sold and turned-over the subject lot to a buyer on November 22, 2011.
Therefore, it no longer had any legal interest in the case.
DBP further pointed out that the Cabuhats were forum shopping
because they had already filed a complaint to set aside the same foreclosure
proceedings and to nullify the 1998 mortgage. 18 The case was pending
before the RTC, Puerto Princesa, Branch 95, and docketed as Civil Case No.
4546.
In their Reply,19 the Cabuhats emphasized that DBP only raised two
issues: (1) its lack of legal interest in the suit; and (2) the Cabuhats alleged
forum shopping. They insisted that unlike Land Case No. 1741, Civil Case
No. 4546 involves the 1998 mortgage, not the cancelled 1993 mortgage.
On April 4, 2012, the Cabuhats filed an Omnibus Motion praying for
RTC to immediately resolve: (1) DBPs opposition20 and (2) the validity of
an extrajudicial foreclosure of an inexistent/cancelled mortgage.21
On June 27, 2012, the RTC issued the assailed Order. The RTC held
that DBP remains a real party-in-interest despite the sale because there had
been no motion for substitution of the parties.22 It also denied the DBPs
forum shopping argument because an ex parte proceeding for the issuance of

13
14
15
16
17
18
19
20
21
22

Id. at 50-51.
Id. at 50.
Id. at 53.
Id. at 61.
Id. at 69.
Id. at 69-70.
Id. at 72.
Id. at 77.
Id. at 80.
Id. at 24.

Decision

G.R. No. 203924

a writ of possession is not a judgment on the merits that can amount to res
judicata.23
However, the RTC dismissed the Cabuhats petition. It reasoned that
under Section 8 of Act No. 3135, a petition to set aside the foreclosure sale
and cancel the writ of possession can only be filed within the 30-day period
immediately after the purchaser acquires possession. Considering that it
filed before the DBP entered possession, the petition was premature.
The Cabuhats moved for reconsideration 24 but the RTC denied the
motion. Hence, the present petition.
The Arguments
The Cabuhats justify their direct resort to this Court by asserting that
they only raise pure questions of law. 25 They argue that the RTC
misinterpreted Section 8 of Act No. 3135 because the law does not prohibit
the mortgagor from filing the petition to set aside the foreclosure before the
purchaser actually acquires possession.
They argue that the dismissal of their petition based on a ground that
DBP did not raise is invalid.26 Lastly, they insist that the foreclosure was
void because: (1) DBP did not have a special power of authority to foreclose
the property; and (2) the foreclosure was made pursuant to the
cancelled/inexistent 1993 mortgage.27
DBP counters that it foreclosed the property pursuant to the October
30, 1998 mortgage after the Cabuhats failed to pay their loan. 28 It also
reiterates that it already lost legal interest over the property and moves to be
substituted by the buyer.29
Citing Sps. Ong v. Court of Appeals,30 DBP also adopts the RTCs
interpretation of Section 8 of Act No. 3135.31
Further, DBP points out that the Cabuhats already have a pending case
to set aside the foreclosure sale in Civil Case No. 4546. DBP emphasizes
that in their complaint, the Cabuhats admitted that the foreclosure was made
pursuant to the 1998 mortgage.32

23
24
25
26
27
28
29
30
31
32

Id.
Id. at 28.
Id. at 9.
Id. at 15.
Id. at 18.
Id. at 113.
Id. at 121-122.
388 Phil. 857 (2000).
Rollo, p. 123.
Id. at 125.

Decision

G.R. No. 203924

Lastly, DBP protests that the existence or validity of the mortgage and
the foreclosure sale is a factual matter and an improper subject of a review
on certiorari.33
Our Ruling
We DENY the petition for lack of merit.
At the outset, we note that, as DBP observed, the petition does not
raise pure questions of law. Despite the Cabuhats insistence, DBP maintains
that the foreclosure was based on the 1998 mortgage a valid and existing
agreement. The Cabuhats contention that the foreclosure was made
pursuant to a void/cancelled/inexistent mortgage is a question of fact beyond
the scope of this review. This alone warrants the outright dismissal of the
petition for being the wrong remedy.
Even if the rules of procedure were relaxed to accommodate the
petition, it should still be denied for lack of merit.
We agree with the Cabuhats that the RTC misinterpreted the
reglementary period under Section 8 of Act No. 3135. It held that a petition
to set aside the sale and cancel the writ of possession cannot be filed until
the purchaser is placed in possession of the property. However, this finds no
support in the law:
Section 8. The debtor may, in the proceedings in which possession was
requested, but not later than thirty days after the purchaser was given
possession, petition that the sale be set aside and the writ of possession
cancelled x x x. (emphasis supplied)

The provision does not prohibit a purchaser from filing the petition
before the purchaser enters into possession. The limitation merely prohibits
the filing of the petition beyond thirty days from the purchasers possession
of the property.
The rationale for the 30-day period and the reckoning point of the
purchasers possession is the character of the proceedings. A petition to set
aside the sale and/or cancel the writ of possession is filed in the same
proceedings in which possession is requested. Under Section 7 of Act No.
3135, this proceeding is ex parte and non-litigious; there is no need to notify
or hear the mortgagor.
Considering that Act No. 3135 does not require the creditor to notify
the debtor or the mortgagor of the extrajudicial foreclosure, it is possible that
a mortgagor will not discover the proceedings until the writ of possession is
implemented.

33

Id. at 128.

Decision

G.R. No. 203924

Section 8 provides a 30-day cutoff period to set aside the sale

reckoned from the date when the mortgagor is presumed to have received
notice. Nevertheless, it does not prohibit the mortgagor from filing the
petition earlier in case he learns of the proceedings beforehand. The petition
to set aside the foreclosure sale is not premature if the sale has already taken
place because the cause of action had already ripened.
DBPs reliance on Ong v. Court of Appeals is misplaced. The thrust of
Ong is that the mortgagor cannot restrain the issuance or the implementation
of a writ of possession under Section 7 because it is ministerial upon the
RTC to put the purchaser in possession of the property upon: (1) the
mortgagors failure to redeem; and (2) consolidation of the title in the
purchasers name. Consistent with the law, Ong does not prohibit the
mortgagor from filing the petition before the purchaser actually enters
possession.
However, even though the Cabuhats petition before the RTC was not
premature, it was still subject to dismissal for going beyond the scope of
Section 8. For emphasis, Section 8 reads:
Section 8. The debtor may, in the proceedings in which possession was
requested, but not later than thirty days after the purchaser was given
possession, petition that the sale be set aside and the writ of possession
cancelled, specifying the damages suffered by him, because the mortgage
was not violated or the sale was not made in accordance with the
provisions hereof, and the court shall take cognizance of this petition in
accordance with the summary procedure x x x. (emphasis supplied)

A petition under Section 8 is limited to two grounds: (1) that the

mortgage was not violated, meaning the debtor has not missed any payments
of his loan; or (2) that the foreclosure sale did not comply with the
procedural requirements under Sections 1-4 of Act No. 3135.34
These grounds are exclusive. More importantly, both grounds
implicitly admit the existence and validity of the mortgage a fact that the
34

Section 1. When a sale is made under a special power inserted in or attached to any real-estate
mortgage hereafter made as security for the payment of money or the fulfillment of any other
obligation, the provisions of the following election shall govern as to the manner in which the sale
and redemption shall be effected, whether or not provision for the same is made in the power.
Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is
situated; and in case the place within said province in which the sale is to be made is subject to
stipulation, such sale shall be made in said place or in the municipal building of the municipality
in which the property or part thereof is situated.
Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least
three public places of the municipality or city where the property is situated, and if such property
is worth more than four hundred pesos, such notice shall also be published once a week for at least
three consecutive weeks in a newspaper of general circulation in the municipality or city.
Sec. 4. The sale shall be made at public auction, between the hours of nine in the morning and four
in the afternoon; and shall be under the direction of the sheriff of the province, the justice or
auxiliary justice of the peace of the municipality in which such sale has to be made, or a notary
public of said municipality, who shall be entitled to collect a fee of five pesos each day of actual
work performed, in addition to his expenses.

Decision

G.R. No. 203924

Cabuhats' petition denies. Accordingly, the Cabuhats' October 27, 2011

Urgent Motion/Petition went beyond the permissible scope of Section 8.
A petition under Section 8 of Act No. 3135 is filed in the same
proceedings where possession is requested. This is a summary proceeding
under Section 7 because the issuance of a writ of possession is a ministerial
function of the RTC. This possessory proceeding is not a judgment on the
merits, but simply an incident in the transfer of title. 35 Consequently, the
judgment cannot produce the effect of res judicata.
A Section 8 proceeding is narrowly designed only to set aside the
sale and/or the order granting possession under Section 7. It cannot annul
the validity of the foreclosure or of the mortgage. Due to its very limited
scope, it cannot entertain issues beyond the procedural irregularities in the
sale.
The remedy of a litigant who challenges the existence of the mortgage
or the validity - not the regularity - of the foreclosure is a separate action to
annul them. These grounds outside Section 8 have to be threshed out in a
full-blown trial.
Lastly, this Court notes the pendency of Civil Case No. 4546 where
the parties are already litigating the validity of both the foreclosure sale and
the mortgage that led to the sale. This present petition only contributes to the
multiplicity of suits that only serve to clog our dockets.
WHEREFORE, we DENY the petition for lack of merit.
SO ORDERED.

ARTUROD.
Associate Justice

WE CONCUR:

Associate Justice
Chairperson

35

Ong v. Court ofAppeals, supra note 30, at 867-868.

r:

Decision

(On Leave)
MARIANO C. DEL CASTILLO
Associate Justice

G.R. No. 203924

JOSE

CA~ENDOZA
As~~~Jdstice

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

~
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the
Division Chairperson's Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

....,,.